Inclusion Criteria

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