I couldn't get that parameters.xml to do anything.
If you create a MyService.wpp.targets file,
http://msdn.microsoft.com/en-us/library/ff398069(v=vs.110).aspx
Then you can add an entry into that file. It will set this value in the setparamters.xml (it wont however set the value inside the zip, which is a bit of a pain, cos what if the someone just imports the zip. But this is better than nothing.
C:\Program Files\Blah\MyService\API