RATIONALE: Drugs used in chemotherapy work in different ways to stop cancer cells from dividing so they stop growing or die. Peripheral stem cell transplantation may allow doctors to give higher doses of chemotherapy drugs and kill more cancer cells. Biological therapies, such as interferon alfa, use different ways to stimulate the immune system and stop cancer cells from growing. Thalidomide may stop the growth of cancer cells by stopping blood flow to the tumor. Pamidronate may help to reduce the side effects of treatment for multiple myeloma.