With the latest version of Skype, there is actually no way to tell for certain whether someone has blocked you, or is simply offline.
However, there are a couple of things you may want to keep an eye out for:
Does their "mood" on Skype never change? A mood is like a status, a way of communicating a brief description of how a user is currently feeling. If this never changes and you know the user is a regular Skype user, this could be an indication.
Try removing or deleting a user from your own contact list, so you are definitely no longer friends. Then try searching for their user name in the Skype contacts search. If they don't show up, this is another sign that they have blocked you.