It's been a while since I played the game now, so forgive me if my memory is hazy.
If I remember correctly, Block 4 is the one where you need to go to all the cities to complete the block, so is it possible that you need to visit Damascus or Accra??? to move on. Have you finished all the pickpocket, challenge and other missions in the bit of Jerusalem you're in? Come to think of it, are you in the right bit of Jerusalem as I think that block moves you into the poor quarter instead of the one you first start in.
If none of that helps you and you're playing on the 360, check out the relevant bit at
http://www.xbox360achievements.org Click on "Retail Games" on the the left hand side and find Assassin's Creed. There's an achievement guide and there may well be a walkthrough. If nothing else, the game specific forum may well give you some hints.
it doesn't sound like a bug, but if all else fails you could try starting again and see where you go from there, although that would be a PITA
Hope that helps