Clofarabine or Daunorubicin Hydrochloride and Cytarabine Followed By Decitabine or Observation in Treating Older Patients With Newly Diagnosed Acute Myeloid Leukemia

Inclusion Criteria for Step 1 (Induction): * Sexually active males must be strongly advised to use an accepted and effective method of contraception * Aspartate aminotransferase (AST), alanine aminotransferase (ALT), total bilirubin =\< grade 1 * Newly-diagnosed AML patients according to World Health Organization (WHO) classification who are considered candidates for intensive chemotherapy based upon examination of peripheral blood or bone marrow aspirate specimens or touch preparations of the bone marrow biopsy obtained within two weeks prior to randomization; a bone marrow aspirate is required for enrollment; however, on occasion there is discordance between percentage of myeloblasts on the differential of the peripheral blood or aspirate; the peripheral blood criteria are sufficient for diagnosis; confirmatory immunophenotyping will be performed centrally * ECOG performance status (PS) 0-3 (restricted to ECOG PS 0-2 if \>= 70 years of age) * Patients with secondary AML are eligible for enrollment onto the trial; secondary AML is defined as AML that has developed in a person with a history of antecedent blood count abnormalities, or myelodysplastic syndrome (MDS), or a myeloproliferative disorder (excluding chronic myeloid leukemia); or a history of prior chemotherapy or radiation therapy for a disease other than AML * Total serum bilirubin =\< 1.5 times upper limit of normal (ULN) (=\< grade 1); if total bilirubin is 2 to 3 mg/dL, but direct bilirubin is normal, then the patient will be considered eligible * Patients with a serum creatinine \> 1 are eligible if they have a calculated glomerular filtration rate (GFR) of \>= 60 ml/min (i.e. class I or class II chronic kidney disease ) using the Modification of Diet in Renal Disease (MDRD) formula * Note: Daily creatinine and MDRD formula are only for the 1st induction cycle * Cardiac ejection fraction \>= 45% or within institutional normal limits; a nuclear medicine gated blood pool examination is preferred; a two-dimensional (2-D) echocardiogram (ECHO) scan is acceptable if a calculated ejection fraction is obtained and follow-up measurement of the cardiac ejection fraction will also be performed by echocardiography; measurement of cardiac ejection fraction should be within two weeks prior to receiving treatment * NOTE: when a multi gated acquisition scan (MUGA) or echocardiogram cannot be obtained due to weekend or holiday, then patients may be enrolled provided there is no history of significant cardiovascular disease and a measurement of cardiac ejection fraction will be performed within 5 days of study enrollment * Patients with suspected central nervous system (CNS) involvement should undergo lumbar puncture * Cytogenetic analysis must be performed from diagnostic bone marrow (preferred) or if adequate number of circulating blasts (\>10\^9/l) from peripheral blood * HLA typing should be performed at registration, if possible * Diagnostic bone marrow and peripheral blood specimens must be submitted for immunophenotyping and selected molecular testing Exclusion Criteria for Step 1 (Induction): * Concurrent active malignancy for which they are receiving treatment (other than myelodysplastic syndromes \[MDS\]) * Active, uncontrolled infection * Acute promyelocytic leukemia (APL) confirmed either by the presence of t(15;17)(q22;q21) or promyelocytic leukemia (PML)/retinoic acid receptor (RAR) alpha transcripts * Blastic transformation of chronic myelogenous leukemia * Prior therapy of MDS with decitabine, low-dose cytarabine, or azacitidine * Prior chemotherapy for AML with the exception of hydroxyurea for increased blast count or leukapheresis for leukocytosis * Documented CNS involvement * Previous treatment for antecedent hematological disorders (AHD) with 5-azacitidine, decitabine, or low dose cytarabine * Human immunodeficiency virus (HIV) infection Inclusion Criteria for Step 2 (Consolidation) * NOTE: All patients achieving complete remission (CR) or complete remission with incomplete blood count recovery (CRi) will receive consolidation when fit * NOTE: Patients proceeding to transplant are allowed up to one cycle of consolidation treatment * Consolidation cycle 1 must commence within sixty days of the bone marrow aspirate and biopsy that confirmed the presence of a CR or CRi * Patients must have achieved a CR or CRi (or morphologic leukemia-free state for those patients proceeding to Arm G transplant) * Patients who have achieved a CR or CRi must have maintained peripheral blood evidence of a CR or CRi * ECOG performance status of 0-2 * Patients must have resolved any serious infectious complications related to induction * NOTE: Patients with an HLA-matched donor and proceeding to transplant will be allowed up to one cycle of consolidation treatment * Any significant medical complications related to induction must have resolved * Patients must have a creatinine and AST =\< grade 1 within 48 hours prior to registration Inclusion Criteria for Step 3 (Maintenance): * Maintenance should commence within 60 days of recovery of peripheral blood counts after consolidation cycle 2; patients must begin consolidation cycle 2 within 60 days of recovery to be eligible for further therapy * Patients must have maintained peripheral blood evidence of a remission and must have a CR or CRi, confirmed on restaging bone marrow (BM) aspirate and biopsy and cytogenetic analysis * ECOG performance status of 0 -2 * Patients must have resolved any serious infectious complications related to consolidation cycle 2 * Any significant medical complications related to consolidation cycle 2 must have resolved * Total serum bilirubin =\< 1.5 x ULN * NOTE: if total bilirubin is 2-3 mg/dL, but direct bilirubin is normal, then the patient will be considered eligible * Serum creatinine =\< grade 1 * The absolute neutrophil count (ANC) must be \> 1000 mm\^3 prior to starting every cycle of treatment with decitabine; decitabine may be delayed for up to 4 weeks between cycles (i.e. may be administered as infrequently as every (q) 8 weeks) while waiting for counts to recover * The platelet count must be \> 75,000 mm\^3 prior to starting every cycle of treatment with decitabine; decitabine may be delayed for up to 4 weeks between cycles (i.e. may be administered as infrequently as every (q) 8 weeks) while waiting for counts to recover Inclusion Criteria for Step 3 (Allogeneic Transplantation): * Patients must be \> 28 days from the start of induction or re-induction chemotherapy, or from the start Consolidation Cycle 1 (if received) and \< 90 days following recovery from most recent treatment; and they must have achieved and maintained a response to induction therapy (CR, CRi, or "morphologic disease-free state") * Patients must have recovered from the effects of induction, re-induction, or consolidation chemotherapy (all toxicities =\< grade I with the exception of reversible electrolyte abnormalities), and have no ongoing active infection requiring treatment * Patients must have a total serum bilirubin =\< 1.5 x ULN (grade =\< 1) and a serum creatinine =\< grade 1; AST \<= grade 1 * An eligible HLA-identical donor (either related or unrelated) should be available; in sibling donors, low resolution HLA typing (A,B,DR) will be considered sufficient; in the case of unrelated donors, high-resolution class I and II typing (A, B, C, DRB1 and DQ) should be matched at all 10 loci; donors must be willing and able to undergo peripheral blood progenitor mobilization * HLA-identical sibling (6/6): the donor must be determined to be an HLA-identical sibling (6/6) by serologic typing for class (A, B) and low resolution molecular typing for class II (DRB1) * Matched unrelated donor (10/10): high resolution molecular typing at the following loci is required: HLA-A, -B, -C, -DRBL, and -DQB1 * NOTE: for matched donors - will allow select 1 antigen mismatched sibling donors and unrelated donors in accordance with site institutional standard, as long as matched at HLA-A, HLA-B, HLA-C, and DRB1, and with advanced discussion/approval by the Study Chair and the bone marrow transplant (BMT) co-chair * Patients must be considered reliable enough to comply with the medication regimen and follow-up, and have social support necessary to allow this compliance * Patients must have a cardiac ejection fraction of \>= 40%, or within institutional normal limits; a nuclear medicine gated blood pool examination is preferred; a 2-D ECHO scan is acceptable if a calculated ejection fraction is obtained and follow-up measurement of the cardiac ejection fraction will also be performed by echocardiography; measurement of cardiac ejection fraction should be within two weeks prior to allogeneic transplantation * Diffusion capacity of carbon monoxide (DLCO) \> 40% with no symptomatic pulmonary disease Exclusion Criteria for Step 3 (Allogeneic Transplantation): * Hypersensitivity to Escherichia (E.) coli-derived products * Human immunodeficiency virus (HIV) infection; patients with immune dysfunction are at a significantly higher risk of toxicities from intensive immunosuppressive therapies