In Photoshop, you set your scratch drives in Edit>Preferences> Plug-in and Scratch discs... I have never seen any setting for controlling the size... However, there is a setting for how much, (percentage), RAM it will "appropriate" to run. 
  The reason Photoshop doesn't like running it's cache on your startup "C" drive, is that the size is completely variable, and depends on what you are doing... how often you purge, how "big" the files are that you have open, and so-on...
  I have found that it's much more practical to preset windows to it's maximum cache size, on two partitions, with the minimum set to the same size, or slightly less, then set at least two partitions of around six Gig, for "exclusive" use by Photoshop.
  Partition Magic is very useful for all this.... Meantime... the default setting for RAM usage by Photoshop is 50%.... which is good, but if you have two, or three GIG available, you can tweak it up to a lot more.... Windows does not require much more than 300 MB of RAM to run, but that can go up, depending on what you have running in the background..... simply tweaking the RAM used for Photoshop, (This doesn't take effect until you restart Photoshop), will give it's speed quite a boost.
Lou.

"..... and that was when things got interestiing."