Inclusion Criteria

DISEASE CHARACTERISTICS:

- Histologically confirmed indolent lymphoma or leukemia of one of the following
subtypes:

- Chronic lymphocytic leukemia

- Follicular center lymphoma (grade I or II)

- Lymphoplasmacytic lymphoma

- Marginal zone lymphoma (nodal, extranodal, or splenic)

- Small lymphocytic lymphoma

- Waldenstrom's macroglobulinemia

- Any stage of disease allowed

- No hairy cell leukemia

- No T-cell lymphomas

- No prior treatment for lymphoma/leukemia

- Considered appropriate for expectant management

- Must not require cytotoxic therapy

PATIENT CHARACTERISTICS:

Age

- 18 and over

Performance status

- ECOG 0-1

Life expectancy

- Not specified

Hematopoietic

- Absolute neutrophil count at least 1,500/mm^3

- Hemoglobin greater than 10.0 g/dL

- Platelet count greater than 75,000/mm^3

Hepatic

- Bilirubin no greater than 2 times normal

- AST and ALT no greater than 2 times normal

Renal

- Creatinine no greater than 2.0 mg/dL

Cardiovascular

- No uncontrolled congestive heart failure

- No New York Heart Association class III or IV heart disease

- No unstable coronary artery disease

- No myocardial infarction in the past 6 months

- No serious or uncontrolled arrhythmias

- No history of thromboembolic disease

Pulmonary

- No asthma or chronic obstructive pulmonary disease requiring the use of home oxygen
or frequent oral steroids (prednisone greater than 20 mg per day for 5 days within
the past 3 months)

Other

- HIV negative

- Not pregnant or nursing

- Negative pregnancy test

- Not planning to become pregnant in the next 2 years

- Fertile female patients must use 1 highly effective method and 1 additional effective
method of contraception for 1 month prior to, during, and for 1 month after study
participation

- Male patients must use effective barrier contraception during and for 1 month after
study participation

- Willing and able to participate in the S.T.E.P.S. (System for Thalidomide Education
and Prescribing Safety) program

- No contraindications to meeting the requirements of the S.T.E.P.S. program

- No other prior malignancy except curatively treated non-melanoma skin cancer or
carcinoma in situ of the cervix

- No peripheral neuropathy

- No poorly controlled diabetes defined by either of the following:

- Glycosylated hemoglobin greater than 8.0 g/dL

- Known end organ disease (i.e., nephropathy, retinopathy, or neuropathy)

- No other concurrent illness that would preclude study therapy

PRIOR CONCURRENT THERAPY:

Biologic therapy

- Not specified

Chemotherapy

- See Disease Characteristics

Endocrine therapy

- Not specified

Radiotherapy

- Not specified

Surgery

- Not specified