DISEASE CHARACTERISTICS: Cytologically confirmed myelodysplastic syndrome (MDS) Intermediate 1, 2, or high risk disease OR Low risk disease with one of the following: Symptomatic anemia requiring transfusion for at least 3 months prior to study Symptomatic thrombocytopenia requiring platelet transfusion Platelet count less than 50,000/mm3 Absolute neutrophil count less than 1,000/mm3 with an infection Stable disease for 1 month with no progression to acute myeloid leukemia Declined or not eligible for allogeneic bone marrow transplant (alloBMT) No prior treatment of MDS with chemotherapy or alloBMT No prior leukemia or more than 30% myeloblasts in the bone marrow

PATIENT CHARACTERISTICS: Age: Over 18 Performance status: 0-2 Life expectancy: Greater than 4 months Hematopoietic: See Disease Characteristics

Hepatic: Bilirubin less than 1.5 times normal (unless due to hemolysis or ineffective erythropoiesis) AST and ALT less than 2 times normal Renal:

Creatinine less than 1.5 times normal Cardiovascular: No uncontrolled or severe congestive heart failure Pulmonary: Serum CO2 greater than 18 mmHg Other: No uncorrected folate or vitamin B12 deficiency HIV negative No other medical or psychiatric illness that would preclude study At least 3 years since prior nonleukemic malignancy Not pregnant or nursing Negative pregnancy test Fertile patients must use effective contraception

PRIOR CONCURRENT THERAPY: Biologic therapy: See Disease Characteristics At least 1 month since prior interferon, interleukin-3, or interleukin-11 At least 1 month since prior epoetin alfa, filgrastim (G-CSF), or sargramostim (GM-CSF) No concurrent hematologic growth factors Chemotherapy: See Disease Characteristics Prior chemotherapy for nonleukemic malignancy allowed No prior azacitidine Endocrine therapy: At least 1 month since prior corticosteroids or danazol No concurrent steroids Radiotherapy: Prior radiotherapy for nonleukemic malignancy allowed Surgery: Not specified Other: No prior antithymocyte globulin or cyclosporine No prior amifostine