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 the development of a desquamating rash * No other serious illness or medical condition that would preclude study participation * No history of significant neurologic or psychiatric disorder that would preclude informed consent * No known HIV positivity * No pre-existing cardiovascular conditions and/or symptomatic cardiac dysfunction, including any of the following: * Significant cardiac event (including symptomatic heart failure or angina) within 3 months prior to randomization * Any cardiac disease that increases risk for ventricular arrhythmia * History of ventricular arrhythmia that was symptomatic or required treatment, including any of the following: * Multifocal premature ventricular contractions * Bigeminy * Trigeminy * Ventricular tachycardia/fibrillation/flutter/arrhythmia NOS PRIOR CONCURRENT THERAPY: * No prior chemotherapy or corticosteroids for the treatment of multiple myeloma * Prior corticosteroids for the treatment of hypercalcemia or spinal cord compression allowed provided maximum levels have not been reached (i.e.,\< 120 mg for dexamethasone or \< 792 mg for prednisone) * Prior radiotherapy to single sites for pain control or local plasmacytoma allowed * Prior or concurrent bisphosphonates allowed * At least 28 days since prior investigational anticancer agents or therapy * No concurrent corticosteroids above physiologic replacement doses * Concurrent radiotherapy to sites of active myeloma with pain or neurologic compromise allowed * No concurrent filgrastim (G-CSF) on day 1 of course 1 * No other concurrent anticancer therapy * No other concurrent investigational therapy