After upgrade with sudo rsetup -> System -> System Update new kernel was built, but you can still use the old one.
For that you should change the default to l1 from l0 in /boot/extlinux/extlinux.conf. l1 target should point to linux image 5.10.160-26-rk356x instead of 5.10.160-38-rk356x.
Use overlays from kernel 5.10.160-26-rk356x and camera will work just fine.
