#1 is the most common option, imo.

Maybe I should have elaborated. If you omit the number, for example, "s/he has years of experience" is the only correct way to say or write this. But I think with a number, people often get confused. They frequently add "worth" into the mix because of that: 20 years' worth of experience, e.g. The reason I think #1 is the most common option (wrong or right) is because most people (at least in my experience) abhor (or at least don't like) dangling apostrophes.

I agree with Spike. (1) is wrong because of the missing apostrophe. (2) is right. (3) isn't wrong but is less common.

The apostrophe isn't dangling, it's just how English forms the plural possessive.

Unlike the construction with of, the genitive by itself only seems to work with time – not mass, distance, volume, etc.

I don't know how stupid you think I am, hm, but apparently my IQ barely seems to rate above room temperature in your eyes. I know how the plural possessive is formed. I also know the apostrophe isn't dangling; I just called it that because I wanted to. It seemed very apropos to me because that's what it looks like to me: an apostrophe dangling above a period. Is everything 100 percent formal and serious 100 percent of the time with you? Do you never veer from the straight and narrow when it comes to language? Gee, how exciting life must be that way.

@5: Did you notice, however, that in the present case the genitive works the other way round (and is, in fact, a different genitive)?