I don't think your program is actually called.

Everything seems to be inside the extractGenes-method, which is never called:

def extractGenes(variable,input,output): 
    variable = False 
    if '-s' in sys.argv[1]: 
        variable = True 
    if not input.endswith(".genes"): 
        print("Incorrect file type.") 
        sys.exit(1) 
    if not output.endswith(".fa") or output.endswith(".fasta"):
        print("Incorrect file type.") 
        sys.exit(1)

Did I format this correctly? First of all, the method gets a "variable" from somewhere, which it then overwrites anyway. I don't understand what the variable is for anyway. I also don't really understand what your method is supposed to do - you give it an "input" and an "output" which both look like filenames, but at the same time, you look at the methods arguments in sys.argv? In the end, your program never prints anything if all input-variables are correctly named, so it's no wonder that nothing happens.

Here's how I would do it:

import sys
def main():
    """ Usage: python script.py input.genes output.fa """
    if not sys.argv[1].endswith(".genes"): 
        sys.stderr.write("Incorrect file type in input.\n") 
        sys.exit(1) 
    if not sys.argv[2].endswith(".fa") or not sys.argv[2].endswith(".fasta"):
        sys.stderr.write("Incorrect file type in output.\n") 
        sys.exit(1)
    print "Everything works fine!"
main()

Notice how I call the main-method in the end and use stderr to write error-messages.