Jamal, the Generate Map Server Cache Tiling Scheme (Server) tool does not need to have the area of interest parameter because it is served for another purposes - to generate an XML tiling scheme file that defines the scale levels, tile dimensions, and other properties for a map service cache. This schema can be used thereafter by other map services. When you want to limit what area of your map service will be cached, you use another tool - Manage Map Server Cache Tiles (Server). This is how the software is designed.
Sure. Search for "Area of interest to cache" section in the help here. You would need to specify a feature class which extent you want to use to generate map cache tiles when running the GP tool or using the Service Editor wizard.http://resources.arcgis.com/en/help/main/10.1/index.html#//015400000414000000Some considerations when caching on feature boundaries:http://resources.arcgis.com/en/help/main/10.1/index.html#/Map_caching_based_on_feature_boundaries/01540000044z000000/
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