I have iPad 2 wifi running on 6.1.2 and its jailbroken and I want to erase all content and setting should I erase all the content and setting or something else
No, you should never use that option on a jailbroken device.
You have 2 options.
If you want to keep the ability to be able to jailbreak on the iPad2, you probably should look into iLex RAT. It has an option (Number 12) which will do something similar to Erase All Content and Setting, but it will work and maintain your jailbreak and Cydia. See the thread here for more info - http://www.ipadforums.net/ipad-hack...-tweaks-without-restoring-rejailbreaking.html
If you are not bothered about jailbreaking any more and simply want to restore to the latest version of IOS, which cannot be jailbroken, then connect to iTunes and simply restore.