We present results from diffraction-limited L -band spectroscopy and H, K, and L -band imaging of the IRS 13 region in the Galactic Center performed with the new adaptive optics camera NAOS/CONICA at the ESO VLT. We have discovered a small ( 0.13 l.y. diameter) cluster of compact sources about 0.5 arcsec north of IRS 13 with strong IR excesses due to T>500 K dust. The nature of the sources is unclear. They may be a cluster of highly extincted stars that heat the local environment of the mini-spiral. We also consider an explanation that involves the presence of young stars at evolutionary stages between YSOs and Herbig Ae/Be with ages of about 0.1-1 million years. This scenario would imply more recent star formation in the GC than previously suspected. The AO imaging and spectroscopic observations also resolve the central IRS 13 complex. Component E3 is resolved into 2 components E3N and E3c.