The new way to configure default shell and argument commands in VSCode?

In the settings.json file we need to have the following

"terminal.integrated.profiles.windows": {
    "PowerShell": {
        "source": "PowerShell",
        "icon": "terminal-powershell"
    },
    "Command Prompt": {
        "path": [
            "${env:windir}\\Sysnative\\cmd.exe",
            "${env:windir}\\System32\\cmd.exe"
        ],
        "args": [],
        "icon": "terminal-cmd"
    },
    "Git Bash": {
        "source": "Git Bash"
    }
},

And set the default terminal by adding

"terminal.integrated.defaultProfile.windows": "Command Prompt",

We can achieve this by pressing Ctrl + Shift + P and searching for Terminal: Select Default Profile and selecting the required shell.

However, although deprecated the setting you have currently should work for now.