Apostrophe not preceded by \
these should both work according to http://developer.android.com/guide/topics/resources/string-resource.html#FormattingAndStyling:
<string name="search_occurs">\'{string}\' occurs {times}</string><string name="search_occurs">"'{string}' occurs {times}"</string>
Why don't you provide the ' with the string you replace it with?
Also you know constructs like this?
<string name="profile_age_range_text_between">between %1$d and %2$d</string><string name="unit_height_inches">%1$d\'%2$d ft</string><string name="unit_distance_miles">%s mi</string>