[Legate of Amon Lanc]

I have nothing against the illusion idea, but I think it is perfectly unnecessary. As some have pointed out, it seems that the pits were not necessarily visible upon approach. Add to it the fact that Gandalf arrived in haste, barely passed through the gate (upon which the inexplicable sense of dread fell on him, which might have contributed to his distraction), and right after that he starts talking to Saruman, which distracts him further (plus, add the possibility of the Voice being used to shift his focus more on the talking and less on looking around).

Also, correct me if I don't recall properly, but I believe Gandalf says that he arrived at dusk, or maybe even after dark. That would severely limit his powers of observation. I mean, riding up the road rimmed by some newly-raised iron columns and whatnot, in a large area encircled by a wall, in twilight or even at night, you don't necessary see any pits which are, say, couple of hundred meters away from you.

So I think it is the combination of all of the above (except the illusion). Strategic placement of the pits that they are not right under everybody's nose when they arrive. Limited visibility after dark. Gandalf's mind preoccuppied by "what are we going to do about the Ring?", "the Nine are abroad!!! We're doomed!!!", "I hope Frodo is still alive", "oh no what if that fool of an innkeep didn't send my letter? I'm gonna fry him" and "oh no, I have to make this arrogant colleague listen to me and endure his wannabe-intellectual condescending comments before we get to the heart of the matter". Saruman's Voice as a bonus. I don't think we need more than this to explain that no pits with Orcs were visible when Gandalf arrived.

And yes, Saruman had to be at the breeding for decades, basically it would be sometime after he had locked himself up in Isengard after looking into the Stone. That still gives him a plenty of time, plus we could think about some accelerated growth for the Orcs (I don't mean cocoons, but since these were basically meant to be killing machines, and Orcs breed fast anyway, I am pretty sure you could have them reach physical maturity in several years instead of two decades).