Lenalidomide and Melphalan in Treating Patients With Previously Untreated Multiple Myeloma

DISEASE CHARACTERISTICS: * Histologically confirmed multiple myeloma by one of the following: * Biopsy of an osteolytic lesion or soft tissue tumor composed of plasma cells * Bone marrow aspirate and/or biopsy demonstrating ≥ 10% plasmacytosis * Bone marrow \< 10% plasma cells but with ≥ 1 bony lesion AND meets the M-protein criteria * Ineligible for stem cell transplantation due to any of the following: * Advanced age * Comorbid illness * Patient preference * Previously untreated disease * Measurable (i.e., quantifiable) serum M-component of IgG, IgA, IgD, or IgE at initial diagnosis OR, if only light-chain disease is present (urine M-protein only), urinary excretion of light-chain protein (Bence Jones) ≥ 1.0 g/24 hours at initial diagnosis * No nonsecretory myeloma PATIENT CHARACTERISTICS: * ECOG performance status 0-2 * Life expectancy ≥ 12 months * Absolute neutrophil count ≥ 1,500/mm\^3 * Platelet count ≥ 150,000/mm\^3 * Creatinine ≤ 3 times upper limit of normal (ULN) * Bilirubin ≤ 1.5 times ULN * AST and/or ALT ≤ 1.5 times ULN * Alkaline phosphatase ≤ 1.5 times ULN * Not pregnant or nursing * Negative pregnancy test * Fertile patients must use 2 methods of effective contraception during and for 4 weeks after completion of study treatment * No other malignancies within the past 5 years, except adequately treated nonmelanoma skin cancer or curatively treated in situ cancer of the cervix * No hypersensitivity to thalidomide or its components, including…