I have been through the same thought process and settled on option 3 for new apps.
My reasoning is as follows;
With option 1 you have two apps to maintain, users have to do a uninstall of your trial version and you have the problem of migrating data between the two versions.
Option 2 has all the problems of option 1 plus the headache of implementation.
Option 3 you have the benefit of only one codebase to maintain, users can quickly and easily upgrade with all their data intact and you have higher download stats/ratings for the one app rather than two.
Implementing it has got a lot easier with the version 3 of the billing library. I followed the sample from Google here and got a simple remove the ad's with IAB within a couple of hours.