Interferon Alfa and Thalidomide in Treating Patients With Stage IV Melanoma

DISEASE CHARACTERISTICS: * Histologically confirmed stage IV malignant melanoma * Surgically incurable disease * Measurable or evaluable disease * No brain metastases by CT scan or MRI * Prior brain metastases allowed only if completely resected and treated with whole brain radiotherapy * Must have received 1, and only 1, prior systemic therapy for metastatic disease * Chemotherapy, biologic/immunotherapy, hormonal therapy, or combination therapy PATIENT CHARACTERISTICS: Age: * Adult Performance status: * Zubrod 0-2 Life expectancy: * Not specified Hematopoietic: * Absolute neutrophil count at least 1,000/mm\^3 * Platelet count at least 75,000/mm\^3 Hepatic: * SGOT and/or SGPT no greater than 2.5 times upper limit of normal (ULN) * Bilirubin no greater than ULN Renal: * Creatinine no greater than 1.5 times ULN Other: * Not pregnant or nursing * Negative pregnancy test * Fertile patients must use 2 methods of effective contraception 4 weeks before, during, and for 4 weeks after study * HIV negative * No AIDS or HIV-1-associated complex * No other serious illness * No serious active infections * No sensory neuropathy greater than grade 1 * No prior seizures or concurrent potential risk factors for the development of seizures * No other prior malignancy within the past 5 years except adequately treated basal cell or squamous cell skin cancer, carcinoma in situ of the cervix, or adequately treated stage I or II cancer currently in complete remission PRIOR CONCURRENT THERAPY: Biologic therapy: * See Disease Characteristics * At least 21 days since prior biologic therapy or immunotherapy in the adjuvant or metastatic setting and recovered * No concurrent filgrastim (G-CSF) * No other concurrent biologic therapy Chemotherapy: * See Disease Characteristics * At least 21 days since prior chemotherapy in the adjuvant or metastatic setting and recovered * No concurrent chemotherapy Endocrine therapy: * See Disease Characteristics * At least 21 days since prior hormonal therapy in the adjuvant or metastatic setting and recovered * No concurrent hormonal therapy * No concurrent systemic steroids (including creams) Radiotherapy: * See Disease Characteristics * At least 21 days since prior radiotherapy and recovered * Prior radiotherapy to all known sites of disease allowed if there is objective evidence of progression * No concurrent radiotherapy Surgery: * See Disease Characteristics * At least 21 days since prior surgery for primary or metastatic disease and recovered * No concurrent surgery Other: * At least 21 days since prior systemic therapy or combination regimen for metastatic disease and recovered * At least 21 days since prior adjuvant isolation limb perfusion therapy and recovered * No other concurrent therapy * No other concurrent investigational drugs * No concurrent immunosuppressive medications * Concurrent antihistamines allowed if no alternative medication available