OBJECTIVES: I. Determine the maximum tolerated dose of decitabine in combination with busulfan and cyclophosphamide in patients with hematologic malignancies. II. Establish the pharmacokinetics of decitabine and busulfan in this patient population. III. Determine the effectiveness of this combination in achieving durable complete remission in patients with chronic myelogenous leukemia (CML) in blast crisis or acute myelogenous leukemia (AML) in relapse undergoing allogeneic stem cell transplantation.