Can't get nginx caching to work

I have mostly simple nginx configuration. I can't get caching to work

http {
...
server_tokens                   off;
proxy_hide_header               X-Powered-By;
fastcgi_hide_header             X-Powered-By;
client_header_timeout           1024;
client_body_timeout             1024;
send_timeout                    9000;
proxy_read_timeout              4000;
connection_pool_size            256;
client_header_buffer_size       1k;
client_max_body_size            10m;
large_client_header_buffers     2 4k;
request_pool_size               4k;
proxy_buffers                   8 32k;
proxy_buffering                 off;
proxy_buffer_size               32k;
server_names_hash_bucket_size   64;
output_buffers                  3 16k;
postpone_output                 1460;
sendfile                        off;
tcp_nopush                      on;
tcp_nodelay                     on;
keepalive_timeout               30 100;
ignore_invalid_headers          off;
log_format custom '$host $uri $remote_addr [$time_local] $status $bytes_sent [$request]';

proxy_cache_path /var/cache/nginx/cache levels=1:2 keys_zone=melco:500m inactive=15m max_size=1000m;
proxy_temp_path /var/cache/nginx/temp;
...

server {
.....
location = /rss.php {
    access_log /var/log/nginx/rss.php.log custom;
    proxy_cache melco;
    proxy_cache_key "$host$request_uri$args";
    proxy_ignore_headers "Cache-Control" "Expires";
    proxy_cache_min_uses 1;
    proxy_cache_valid 200 302 304 5m;
    proxy_cache_use_stale http_502 http_503 http_504;
    proxy_hide_header Set-Cookie;

    proxy_pass  http://192.168.10.102;
    proxy_redirect     off;
    proxy_set_header    X-Forwarded-For       $remote_addr;
    proxy_set_header   Host             $host;
}
...

headers are:

# curl -I http://mysite.com/rss.php
HTTP/1.1 200 OK
Server: nginx
Date: Sun, 10 Apr 2011 15:45:54 GMT
Content-Type: text/xml; charset=windows-1251
Connection: keep-alive
Keep-Alive: timeout=100
X-Powered-By: PHP/5.3.3-7+squeeze1
Pragma: no-cache
Generator: Nucleus CMS
Etag: "f263dc8eb016ffcb6d34b317b8d5a315"
Vary: Accept-Encoding

I can see requests in /var/log/nginx/rss.php.log but /var/cache/nginx/cache is always empty Permissions on /var/cache/nginx/cache set to www-data:www-data (nginx user:group). Any ides? Also how to see in access log if request was from cache?

P.S. nginx ver:

# nginx -V
nginx version: nginx/0.7.67
TLS SNI support enabled
configure arguments: --conf-path=/etc/nginx/nginx.conf --error-log-path=/var/log/nginx/error.log --http-client-body-temp-path=/var/lib/nginx/body --http-fastcgi-temp-path=/var/lib/nginx/fastcgi --http-log-path=/var/log/nginx/access.log --http-proxy-temp-path=/var/lib/nginx/proxy --lock-path=/var/lock/nginx.lock --pid-path=/var/run/nginx.pid --with-debug --with-http_dav_module --with-http_flv_module --with-http_geoip_module --with-http_gzip_static_module --with-http_realip_module --with-http_stub_status_module --with-http_ssl_module --with-http_sub_module --with-ipv6 --with-mail --with-mail_ssl_module --add-module=/tmp/buildd/nginx-0.7.67/modules/nginx-upstream-fair