A value of type 'xxx?' can't be returned from a function with return type 'xxx' because 'xxx?' is nullable and 'xxx' isn't

Code :

class SettingsForm extends StatefulWidget {
  @override
  _SettingsFormState createState() => _SettingsFormState();
}

class _SettingsFormState extends State<SettingsForm> {
  final _formKey = GlobalKey<FormState>();
  final List<String> sugars = ['0', '1', '2', '3', '4'];
  final List<int> strengths = [100, 200, 300, 400, 500, 600, 700, 800, 900];

  // form values
   String? _currentName;
   String? _currentSugars;
   int? _currentStrength;

  @override
  Widget build(BuildContext context) {
    MyUser user = Provider.of<MyUser>(context);

    return StreamBuilder<UserData>(
        stream: DatabaseService(uid: user.uid).userData,
        builder: (context, snapshot) {
          if (snapshot.hasData) {
            UserData? userData = snapshot.data;
            return Form(
              key: _formKey,
              child: Column(
                children: <Widget>[
                  Text(
                    'Update your brew settings.',
                    style: TextStyle(fontSize: 18.0),
                  ),
                  SizedBox(height: 20.0),
                  TextFormField(
                    initialValue: userData!.name,
                    decoration: textInputDecoration,
                    validator: (val) =>
                        val!.isEmpty ? 'Please enter a name' : null,
                    onChanged: (val) => setState(() => _currentName = val),
                  ),
                  SizedBox(height: 10.0),
                  DropdownButtonFormField(
                    value: _currentSugars ?? userData.sugars,
                    decoration: textInputDecoration,
                    items: sugars.map((sugar) {
                      return DropdownMenuItem(
                        value: sugar,
                        child: Text('$sugar sugars'),
                      );
                    }).toList(),
                    onChanged: (val) => setState(() => _currentSugars = val), <--Error here **val** right one
                  ),
                  SizedBox(height: 10.0),
                  Slider(
                    value: (_currentStrength ?? userData.strength).toDouble(),
                    activeColor:
                        Colors.brown[_currentStrength ?? userData.strength],
                    inactiveColor:
                        Colors.brown[_currentStrength ?? userData.strength],
                    min: 100.0,
                    max: 900.0,
                    divisions: 8,
                    onChanged: (val) =>
                        setState(() => _currentStrength = val.round()),
                  ),
                  ElevatedButton(
                      style:
                          ElevatedButton.styleFrom(primary: Colors.pink[400]),
                      child: Text(
                        'Update',
                        style: TextStyle(color: Colors.white),
                      ),
                      onPressed: () async {
                        if (_formKey.currentState!.validate()) {
                          await DatabaseService(uid: user.uid).updateUserData(
                              _currentSugars ?? snapshot.data!.sugars,
                              _currentName ?? snapshot.data!.name,
                              _currentStrength ?? snapshot.data!.strength);
                          Navigator.pop(context);
                        }
                      }),
                ],
              ),
            );
          } else {
            return Loading();
          }
        });
  }
}

Try to give val as a String, or any type you want to to become:

onChanged: (val) => setState(() => _currentSugars = val as String),

Assign the generic type String to the DropdownButtonFormField:

DropdownButtonFormField<String>(
                    value: _currentSugars,
                    decoration: textInputDecoration,
                    items: sugars.map((sugar) {
                      return DropdownMenuItem(
                        value: sugar,
                        child: Text('$sugar sugars'),
                      );
                    }).toList(),
                    onChanged: (val) => setState(() => _currentSugars = val), 
                  ),

Complete demo (Updated to use null safety)

class Demo extends StatefulWidget {
  Demo({Key? key}) : super(key: key);

  @override
  _DemoState createState() => _DemoState();
}

class _DemoState extends State<Demo> {
  final sugars = ['candy', 'chocolate', 'snicker'];
  String? _currentSugars = 'candy';

  @override
  Widget build(BuildContext context) {
    return Scaffold(
      body: Center(
        child: DropdownButtonFormField<String>(
          value: _currentSugars,
          items: sugars.map((sugar) {
            return DropdownMenuItem(
              value: sugar,
              child: Text('$sugar sugars'),
            );
          }).toList(),
          onChanged: (val) => setState(() => _currentSugars = val),
        ),
      ),
    );
  }
}

Value types and reference types are the two main categories of C# types. A variable of a value type contains an instance of the type. This differs from a variable of a reference type, which contains a reference to an instance of the type. By default, on assignment, passing an argument to a method, and returning a method result, variable values are copied. In the case of value-type variables, the corresponding type instances are copied. The following example demonstrates that behavior:

using System;

public struct MutablePoint
{
    public int X;
    public int Y;

    public MutablePoint(int x, int y) => (X, Y) = (x, y);

    public override string ToString() => $"({X}, {Y})";
}

public class Program
{
    public static void Main()
    {
        var p1 = new MutablePoint(1, 2);
        var p2 = p1;
        p2.Y = 200;
        Console.WriteLine($"{nameof(p1)} after {nameof(p2)} is modified: {p1}");
        Console.WriteLine($"{nameof(p2)}: {p2}");

        MutateAndDisplay(p2);
        Console.WriteLine($"{nameof(p2)} after passing to a method: {p2}");
    }

    private static void MutateAndDisplay(MutablePoint p)
    {
        p.X = 100;
        Console.WriteLine($"Point mutated in a method: {p}");
    }
}
// Expected output:
// p1 after p2 is modified: (1, 2)
// p2: (1, 200)
// Point mutated in a method: (100, 200)
// p2 after passing to a method: (1, 200)

If a value type contains a data member of a reference type, only the reference to the instance of the reference type is copied when a value-type instance is copied. Both the copy and original value-type instance have access to the same reference-type instance. The following example demonstrates that behavior:

using System;
using System.Collections.Generic;

public struct TaggedInteger
{
    public int Number;
    private List<string> tags;

    public TaggedInteger(int n)
    {
        Number = n;
        tags = new List<string>();
    }

    public void AddTag(string tag) => tags.Add(tag);

    public override string ToString() => $"{Number} [{string.Join(", ", tags)}]";
}

public class Program
{
    public static void Main()
    {
        var n1 = new TaggedInteger(0);
        n1.AddTag("A");
        Console.WriteLine(n1);  // output: 0 [A]

        var n2 = n1;
        n2.Number = 7;
        n2.AddTag("B");

        Console.WriteLine(n1);  // output: 0 [A, B]
        Console.WriteLine(n2);  // output: 7 [A, B]
    }
}

Example: Passing Value Type Variables

static void ChangeValue(int x)
{
    x =  200;

    Console.WriteLine(x);
}

static void Main(string[] args)
{
    int i = 100;

    Console.WriteLine(i);
    
    ChangeValue(i);
    
    Console.WriteLine(i);
}

Example: Passing Reference Type Variable

static void ChangeReferenceType(Student std2)
{
    std2.StudentName = "Steve";
}

static void Main(string[] args)
{
    Student std1 = new Student();
    std1.StudentName = "Bill";
    
    ChangeReferenceType(std1);

    Console.WriteLine(std1.StudentName);
}

Example: Passing String

static void ChangeReferenceType(string name)
{
    name = "Steve";
}

static void Main(string[] args)
{
    string name = "Bill";
    
    ChangeReferenceType(name);

    Console.WriteLine(name);
}