Nios II, release 1.0, doesn't support hardware multiply on Cyclone.
We have received many requests for this so expect to see it in a future release.
As for the divide custom instruction, Nios II/f has optional support for a built-in divide instruction
that the compiler will use if the option is enabled. This replaces the divide custom instruction for Nios II.
Also, we found a couple of corner-case bugs with the divide custom instruction so decided to turn it off.
The corner cases are when you divide 0x0/0x80000000 or 0x80000000/0x80000000 you get the wrong result.