 ARM II: Patients receive paclitaxel albumin-stabilized nanoparticle formulation IV over 30 minutes and gemcitabine hydrochloride IV over 30 minutes on days 1, 8, and 15. Treatment repeats every 28 days for 3 courses in the absence of disease progression or unacceptable toxicity. Patients achieving stable disease or better undergo pancreatectomy 4-8 weeks after completion of first 3 courses of treatment. Within 4-8 weeks following pancreatectomy, patients receive an additional 3 courses of paclitaxel albumin-stabilized nanoparticle formulation and gemcitabine hydrochloride treatment in the absence of disease progression or unacceptable toxicity. 