What happened to the pop-up alternatives in Google Android Keyboard?
The workaround I found was to go to Settings->Apps->All->Google Keyboard and tap "Uninstall updates".  This reverted the keyboard app to the initial version of 4.021003 that was installed to my Nexus 5 when it updated to Lollipop.  

Apparently the feature I am describing was broken/changed some time between 4.021003 and 4.1.22123. I'm going to report this as a regression and see what they say.