DISEASE CHARACTERISTICS:

• Diagnosis of low- or intermediate-1-risk myelodysplastic syndromes (MDS)

  • No abnormality of chromosome 5 involving a deletion between bands q31 and q33
• Red blood cell (RBC) transfusion-dependent, defined as having received at least 2 units of RBCs within the past 8 weeks
• No proliferative (WBC ≥ 12,000/mm^3) chronic myelomonocytic leukemia

PATIENT CHARACTERISTICS:

Age

• 18 and over

Performance status

• ECOG 0-2

Life expectancy

• Not specified

Hematopoietic

• See Disease Characteristics
• Absolute neutrophil count ≥ 500/mm^3
• Platelet count ≥ 50,000/mm^3
• No clinically significant anemia due to iron, B_12, or folate deficiencies, autoimmune or hereditary hemolysis, or gastrointestinal bleeding* NOTE: *If a marrow aspirate is not evaluable for storage iron, transferrin saturation must be ≥ 20% AND ferritin ≥ 50 ng/mL

Hepatic

• AST and ALT ≤ 3.0 times upper limit of normal
• Bilirubin ≤ 2.0 mg/dL

Renal

• Creatinine ≤ 2.5 mg/dL

Other

• Not pregnant or nursing
• Negative pregnancy test
• Fertile patients must use effective contraception
• No prior grade 3 or greater allergic reaction or hypersensitivity to thalidomide
• No prior grade 3 or greater rash or any desquamation while taking thalidomide
• No other malignancy within the past 3 years except basal cell or squamous cell cancer or carcinoma in situ of the cervix or breast
• No other serious medical condition, laboratory abnormality, or psychiatric illness that would preclude giving informed consent or participating in the study
• Able to aspirate bone marrow

PRIOR CONCURRENT THERAPY:

Biologic therapy

• No prior CC-5013
• More than 7 days since prior hematopoietic growth factors
• No concurrent red blood cell hematopoietic growth factors (e.g., epoetin alfa)

Chemotherapy

• More than 28 days since prior chemotherapy for MDS
• No concurrent chemotherapy for MDS

Endocrine therapy

• More than 28 days since prior chronic use (more than 2 weeks) of more than physiologic doses of corticosteroids (dose equivalent to more than 10 mg/day of prednisone)
• No concurrent corticosteroids except steroids for adrenal failure, hormones for non-cancer-related conditions (e.g., insulin for diabetes), or intermittent dexamethasone as an antiemetic
• No concurrent androgens

Radiotherapy

• Not specified

Surgery

• Not specified

Other

• More than 28 days since prior standard (i.e., immunosuppressive or cytoprotective agents) therapy for MDS
• More than 28 days since prior experimental therapy
• No other concurrent investigational agents