Recently, Illustrator CS5 started setting backward apostrophes in simple possessive nouns. Sometimes, not always. What's going on? Smart punctuation is enabled. Using MacBook Pro, OSX 10.7.4.
In InDesign the type of quotes is determined by the applied language, as some languages use different ones. It's reasonable to expect that's the same for Illy.(*) Did the default change, either for your entire Illustrator setup or for your current document?
(*) Disclaimer. Making good use of a lot of "reasonable" similarities between Illy and Indy has been proved too daunting for their respective programming teams. If it ain't a Language issue, it must therefore be something else. And we can add another bullet to the "please make the Suite behave suitably!" Nag List.
No, but your response prompted me to remember that there are (at least) two ways to tell Illustrator what punctuation you want. File>Document Setup>Type Options>Use Typographer's Quotes, as you say, and Type>Smart Punctuation....Yipes. So far the only thing that has worked is to restart the Mac. So convenient.