Decitabine Followed by Idarubicin and Cytarabine in Treating Patients With Relapsed or Refractory AML and MDS

Inclusion Criteria: * Written informed consent * All patients except those with acute promyelocytic leukemia (APL) who have morphological diagnosis of myelodysplastic syndromes (MDS) refractory anemia with excess blasts (RAEB)-II or AML by World Health Organization (WHO) diagnostic criteria and have either refractory or early relapsed disease; NOTE: * Diagnosis of refractory or relapsed disease must be based on evaluation of a bone marrow (BM) aspirate or peripheral blood (PB) flow cytometry; other standard MDS and AML prognostic studies such as cytogenetics, flow, and molecular testing are highly recommended prior to initiating DAC * A previous BM evaluation or PB flow cytometry from an outside facility are acceptable if the results have been deemed to be adequate for confirming the diagnosis and staging by University of Washington (UW)/Seattle Cancer Care Alliance (SSCA)/Fred Hutchinson Cancer Research Center (FHCRC) review * A BM biopsy is not routinely required but should be obtained if the previous evaluation is not deemed to be adequate for confirming diagnosis and staging by UW/SCCA/FHCRC review * Must have received at least one previous cycle of treatment for myelodysplastic syndrome (MDS) or AML and be either refractory as defined as not responded to this therapy or in early relapse as defined as developing recurrence of the disease within 12 months of obtaining a CR * May have previously received demethylating agents (e.g., DAC, 5-azacytidine \[5AZA\]) or histone deacetylases (e.g., suberoylanilide hydroxamic acid) for their MDS or AML if these demethylating agents were not used in combination with systemic anthracycline and ARAC chemotherapy * May have received hematopoietic growth factors, thalidomide/lenalidomide, signal transduction inhibitors, or low dose cytarabine (=\< 20 mg/m2/day) * May not have received any therapy for their MDS or AML other than hydroxyurea or leukapheresis for at least 14 days prior to start of the first dose of DAC; all non-hematologic toxicities must have resolved to \< grade 2 * Must have a "simplified" treatment-related mortality (TRM) score =\< 9.2 * Females of childbearing potential must have a negative pregnancy test prior to initiation of the protocol therapy; females are considered not of child bearing potential if they are surgically sterile (they have undergone a hysterectomy, bilateral tubal ligation, or bilateral oophorectomy) or they are postmenopausal * Females of childbearing potential and males must be willing to use an effective method of contraception (hormonal or barrier method of birth control; abstinence) from the time consent is signed until 12 weeks after treatment discontinuation * Patients with an active or history of other malignancies are eligible, if their projected overall survival for that malignancy is at least 6 months * Prior hormonal therapy such as aromatase inhibitors, selective estrogen receptor modulators, estrogen receptor down-regulators, luteinizing hormone-releasing hormone (LHRH) agonists and antagonists, and anti-androgens, must be completed at least 30 days prior to initiation of protocol therapy and must remain off hormonal therapy until the patient has finished chemotherapy for their MDS-RAEBII or AML * Direct bilirubin =\< 2.5 mg/dL (assessed within 14 days prior to registration) unless elevation is thought to be due to hepatic infiltration by AML, Gilbert's syndrome, or hemolysis * No known hypersensitivity to decitabine (DAC), aracytidine triphosphate (ARAC), or idarubicin hydrochloride (IDA) * No clinical evidence of central nervous system (CNS) involvement with leukemia, unless a lumbar puncture confirms the absence of leukemic blasts in the cerebrospinal fluid (CSF) * No prior positive test for the human immunodeficiency virus (HIV) * No uncontrolled systemic infection Exclusion Criteria: * Previous therapy with demethylating agents (e.g., DAC, 5AZA, etc.) or histone deacetylases (e.g., suberoylanilide hydroxamic acid, etc.) that was combined with daunorubicin (DNR) or IDA and ARAC * Patients with acute promyelocytic leukemia (APL) * Known hypersensitivity to DAC, ARAC, or IDA * Clinical evidence of CNS involvement with leukemia, unless a lumbar puncture confirms the absence of leukemic blasts in the CSF * Prior positive test for HIV * Uncontrolled systemic fungal, bacterial, viral, or other infection (defined as exhibiting ongoing signs/symptoms related to the infection and without improvement, despite appropriate antibiotics or other treatment) * A "simplified" TRM score \> 9.2 * Bilirubin \> 2.5 mg/dl (assessed within 14 days prior to registration), unless elevation is thought to be due to hepatic infiltration by AML, Gilbert's syndrome, or hemolysis * Patients who have a projected overall survival \< 6 months due to malignancies other than MDS or AML * Documented symptomatic congestive heart failure or a documented left ventricular ejection fraction \< 40% assessed by multigated acquisition (MUGA), echocardiography, or heart catheterization within 21 days prior to start of decitabine