Thalidomide With or Without Fludarabine in Treating Patients With Hematologic Cancer

Inclusion Criteria: * Diagnosis of one of the following: * Confirmed chronic lymphocytic leukemia (CLL), meeting the following criteria: * Peripheral blood lymphocytosis greater than 5,000/mm\^3 * Co-expression of the CD5, CD19, CD20, and CD23 surface antigens * Clonal kappa and lambda light chain expression * Dim surface immunoglobulin expression * Small lymphocytic lymphoma * Relapsed or refractory disease * Must have received at least 1 prior regimen containing fludarabine * Meets one of the following criteria: * Recurrence of lymphocytosis greater than 5,000/mm\^3 or an increase in lymph node volume greater than 50% after achieving complete (CR) or partial response (PR) * Never achieved a CR or PR after receiving at least 2 courses of fludarabine IV for 5 days at a dose of 25 mg/m\^2/day * No other lymphoproliferative diseases or diseases due to transformation of CLL (e.g., prolymphocytic leukemia or Richter's syndrome) * No known CNS disease * Performance status - Karnofsky 60-100% * At least 12 weeks * See Disease Characteristics * Bilirubin \< 2.0 times upper limit of normal (ULN)\* * SGOT \< 2.5 times ULN\* * Creatinine \< 1.5 times ULN * No history of cardiac arrhythmia * No myocardial infarction within the past 6 months * No other malignancy within the past 5 years except basal cell skin cancer or carcinoma in situ of the cervix * No active serious infection uncontrolled by antibiotics * No pre-existing neurotoxicity grade 3 or greater * No other medical condition that would preclude study participation * Not pregnant or nursing * Negative pregnancy test * Female patients must use 2 effective methods (at least 1 highly active method) of contraception 4 weeks before, during, and for 4 weeks after study participation and male patients must use effective barrier contraception during and for 4 weeks after study participation * At least 4 weeks since prior biologic therapy and recovered * No concurrent growth factors (epoetin alfa, filgrastim \[G-CSF\], or sargramostim \[GM-CSF\]) * See Disease Characteristics * No more than 3 prior chemotherapy regimens * At least 4 weeks since prior chemotherapy (6 weeks for nitrosoureas) and recovered * No other concurrent chemotherapy * At least 4 weeks since prior radiotherapy and recovered * No concurrent radiotherapy * Recovered from any prior investigational agents * No other concurrent investigational agents