RATIONALE: Lenalidomide may stop the growth of myelodysplastic syndrome by blocking blood flow to the cell. Colony stimulating factors, such as epoetin alfa, may increase the number of immune cells found in bone marrow or peripheral blood. It is not yet known whether lenalidomide is more effective with or without epoetin alfa in treating patients with myelodysplastic syndrome and anemia. PURPOSE: This randomized phase III trial is studying lenalidomide to see how well it works with or without epoetin alfa in treating patients with myelodysplastic syndrome and anemia. (NCT00843882)